The universe of traditional managed funds has reduced substantially over the last few years. A strategy reflecting the collective views of the average balanced fund manager is therefore less insulated from the calls of individual active managers than previously. As a consequence of this, State Street Global Advisors (SSgA), manager of our Consensus Fund , has concluded that the historic benchmark is no longer the optimal solution.

Change in the Investment Strategy

In response to the changed investment environment SSgA has switched emphasis to follow a fixed asset allocation based on analysis of the historic allocation of the benchmark over the last 26 years.

SSgA has decided to set an initial asset mix as shown below, with a broad exposure to equity, fixed income and alternative investments and rebalancing back to these percentages each month. The historic balanced approach is preserved.

Equities

SSgA also took the opportunity to move to a global equity index, reducing the bias to Irish and Eurozone Equities which was a feature of the previous benchmark.

While this provides some safety against currency risk it may result in missed opportunities worldwide. For this reason, the Equity component of the fund has been switched to a broader, global basis, tracking the SSgA All World Equity Index but with 75% of the currency risk is hedged into Euro.

Bonds

The strategy will track the Citigroup EMU Government Bond (5+ years) index in respect of the bond component.

Alternatives (+ Property)

The purpose of this component is to seek to generate returns of cash plus 2.5% p.a. over the medium to long term through investing in alternative assets such as Emerging Market Bonds, Corporate Bonds and Property through Real Estate Investment Trusts and Infrastructure. Thus, while Property exposure is retained, SSgA has a greater degree of liquidity than previously.

Performance Impact of the New Fund Strategy

Performance to 30th June 2015#

Old Strategy

New Strategy

3 months

-4.01%

-2.58%

Year to Date

10.38%

8.28%

1 Year

19.29%

16.08%

3 Years*

16.81%

15.47%

5 Years*

12.91%

12.54%

10 Years*

6.39%

7.48%

Since August 2000*

4.73%

4.67%

*performance per annumSource SSgA 10th September 2015Based on backtested numbers to August 2000.

#Warning: These figures are estimates only. They are not a guide to the future performance of this investment.

Annualised volatility over the period is shown to have reduced from approx. 10.58% p.a. to approx. 9.71% p.a.**

Volatility will change over time and will vary depending on the period selected.

The Consensus fund has been aligned with the European Securities and Markets Authority (ESMA) Risk ratings scale. It retains a risk rating of 5 on a risk rating scale from 1 to 7. It could be described as a medium to high risk fund.

There is no change to the fund management charge.

**Source SSgA

In Summary

The historic balanced approach with a broad exposure to equities, fixed income and alternative investment is preserved.The strategy retains a long term split of 80% Growth Focused Assets and 20% Matching Characteristics (Bond and Cash based) assets.

The fund now has the ability to invest in a wider variety of alternative assets and infrastructure and can invest inproperty in a more accessible way than previously.

The new strategy provides broader access to a wider variety of asset classes. Equities move away from an Irish/Eurozone bias to a Global perspective but with reduced currency risk.

The reliance on asset allocations set by a decreasing number of balanced fund managers is removed.

The fund risk rating remains at “5” on the ESMA risk scale. There is no change in the fund management fees. Risk ratings can change over time.

The investment objective accordingly changes from reflecting the collective views of the average balanced fund manager to one of seeking to generate capital growth over the long term.

Warning: The value of your investment may go down as well as up.

Warning: This product may be affected by changes in currency exchange rates.

Warning: If you invest in this product you may lose some or all of the money you invest.

The funds referred to on this page may be linked to an insurance-based investment product and the Key Information Document (KID) for this product is available at www.friendsfirst.ie/kids. The Risk Ratings of the funds referred to in this document differ from the corresponding Summary Risk Indicators shown in the KID. An explanation of the differences between the Risk Rating and the Summary Risk Indicator is available at the location above.